After 18 days of silence from KPMG, Absa just dropped it as auditor

Business Insider SA
The SA Communist Party protests state capture outside KPMG’s offices in Johannesburg, October 2017. (Felix Dlangamandla / Gallo)
  • Absa has dropped KPMG as its auditor, it announced early on Thursday morning.
  • "Ongoing and more recent developments" at the audit firm led to the decision, Absa said.
  • After 18 days KPMG still won't say how many of its partners and staff are currently on suspension.

Absa will drop KPMG as its external auditors, it said early on Wednesday morning.

Barclays Africa, as the Absa group is still known until its official renaming, said it had withdrawn a resolution intended for its upcoming annual general meeting (AGM) on the reappointment of KPMG.

"Subsequent to the release of our Notice of AGM, the ongoing and more recent developments were evaluated by the board, which decided that it is no longer able to support the re-appointment of KPMG Inc," the bank said.

The auditor general has also stopped doing business with KPMG in the wake of revelations around its handling of audits of VBS Mutual Bank – and its subsequent lack of transparency.

See also: Six months ago the AG said it was too early to tell if KPMG was compromised. On Tuesday he terminated its contracts 'with immediate effect’.

KPMG kept quiet after suspending one partner because of allegations of serious conflicts in the VBS audit, then told its staff that more people may be involved in the investigation – neglecting to mention that another partner had already been suspended.

For the past 18 days it has failed to answer questions on those suspensions.

It has also not answered questions on how many of its other partners are suspended, or whether any of its other staff involved in the VBS audit have been suspended.

In a notice of its AGM, dated 27 March, Absa said it would ask shareholders to resolve to reappoint KPMG as external auditors. But it also pointed to a statement it had released in October 2017, in the midst of allegations of KPMG's involvement with the Gupta family.

"In particular, the Board highlighted its concern regarding the behaviours underlying the allegations against KPMG Inc. which were in conflict with our values," Absa said about that 2017 statement. And although its board still thought KPMG should be reappointed, it promised to watch KPMG's "ongoing efforts to remediate their governance, independence, and audit quality".

On Thursday Absa did not say what exactly had changed since then – only that its board "is no longer able to support the reappointment of KPMG Inc."

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